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U.S. Housing Policy Update: August 2016

Examining the Party Platforms

Now that Congress has gone home and the country is in the thick of the political convention season, this month we’d like to take a look at what the parties and their presidential nominees have to say about housing policy.

To be candid, so far, housing has not rated as a first-tier issue for either party. Discussion of housing policy was conspicuously absent in most of the debates and primary stump speeches.

But now, with the conventions and nominations at hand, we have the benefit of the party platforms. And while these platforms are not binding, they do frame each party’s high-level thinking on a wide variety of issues, including housing policy.

The Republican National Convention was up first. Most of its platform’s policies on housing reform, financial markets and government regulations echo the recent efforts of the Republican-controlled Congress. They center on the concept that the federal government should scale back its role in housing and promote individual responsibility on the part of borrowers and lenders. The party wants to expand homeownership opportunities, but it intends to achieve this goal through clear and prudent underwriting standards and acceptable lending practices rather than government intervention. The party says Fannie Mae and Freddie Mac should be wound down in size and scope and the Federal Housing Administration downsized.

Pivoting to financial market regulation, the Republican platform vows to overturn parts of the Dodd-Frank legislation – particularly those that affect community banks. The platform also seeks to either abolish the Consumer Financial Protection Bureau or subject it to congressional appropriation. The platform advocates for ending the notion of “too-big-to-fail” financial institutions and supports legislation to ensure that any problems of those institutions can be resolved through the Bankruptcy Code.

The Republican platform did have one major surprise. It calls for the reinstatement of the Glass-Steagall Act, which prohibited commercial banks from engaging in investment banking but was repealed in 1999. On this issue, Mr. Trump finds himself closer to a position associated more recently with Democrats.

Let’s now turn to the Democratic Party platform. It also echoes many of the positions of Congressional Democrats. For example, it seeks to promote affordable housing availability through increased funding to the National Housing Trust Fund and the Housing Choice Voucher Program, strengthening the Fair Housing Act and preserving the 30-year fixed rate mortgage. The platform also conveys a desire to implement credit score reform, expand access to housing counseling, clarify lending rules and even permit the U.S. Post Office to offer basic banking services.

In stark contrast to the Republican platform, the Democratic party wants to protect and strengthen the Dodd-Frank Act. The platform strongly supports the Consumer Financial Protection Bureau (CFPB) and applauds its ongoing efforts to prevent predatory lending. The party opposes efforts to weaken the CFPB or change its governance structure.

One of Secretary Clinton’s toughest challenges in her primary fight against Senator Bernie Sanders was finding a way to distance herself from Wall Street financial institutions. The Democratic platform seeks to reign in Wall Street through a number of steps. These include regulation of shadow-banking activities, the establishment of a financial transaction tax and adoption of an updated and modernized version of Glass-Steagall.

No matter who wins in November, both of these platforms suggest that housing issues and financial reforms will be on the agenda for the administration that takes office in January 2017. Although as we’ve seen in recent years, unless one party controls Congress and the White House, absent a crisis or perceived urgent need, it will likely be difficult for a president to pass even a portion of the housing policy agenda reflected in the platforms.